GE07: HP Charts the Expanding Universe of

(Editor's note: The graphic arts-related announcements at "Print 2.0: Extending the Power of Print" also will be among the themes of HP's exhibit in booth 1229 at Graph Expo. This year, for the first time, HP will present its entire graphic arts portfolio in one booth at the Chicago show. HP has posted a video preview as a guide to what visitors can expect to see.)

September 6, 2007 -- "Print 2.0" is the Hewlett-Packard Company's shorthand for what it sees as an emerging parallel universe of printed output: a consumer-centric, Internet-enabled, global cottage industry of end-users who will churn out trillions of pages in a host of ultra-personalized new forms with the help of a new array of Web-based tools that HP means to place into their eager hands. "What do you have to say?" is the beckoning question that HP will put to these do-it-yourself print producers in a $300 million marketing campaign on behalf of its solutions for Print 2.0â€”solutions that, at first glance, seem to have little to do with that "other" universe of conventional print-for-pay establishments still plying their trade in the realms of 1.0.

In fact, there are a number of significant opportunities for commercial printers in Print 2.0, although it took some careful listening to discern them in "Print 2.0: Extending the Power of Print," the elaborate promotional event staged by HP last week (August 28-29) in New York City as a kick-off to a worldwide push for its latest business strategy. From HP, as elements of Print 2.0, the commercial market can expect advances in inkjet technology as well as new applications in labels, packaging, on-demand books, transpromotional documents, and photo printing on HP Indigo presses.

More generally, print-for-pay establishments will take their place in a triad of output scenarios that HP envisions for Print 2.0: in the home, on desktop devices; at retail locations, from kiosks; and at centralized print locations (i.e., commercial printing businesses), using digital presses. HP says its objective is to make it easy, affordable, and desirable for consumers to print in all three of these environments.

New Face, New Role

The rest of Print 2.0, however, mirrors a new face of HP that mainstream printers may have difficulty recognizing. By acquiring or partnering with companies that harvest the oceans of Internet-based, consumer-oriented matter that will be the raw material of Print 2.0, HP has added the role of content aggregator to its traditional profile as a provider of output solutions. For example, the HP that now offers "NextDay TV" service for the on-demand production of DVDs recapping local sports events is not the HP that printers associate with LaserJets, Indigos, and wide-format inkjet devices.

Another feature of Print 2.0 that may take some getting used to is its heavy emphasis on Web-to-print optionsâ€”embedded point-and-click tools that will, according to HP, give end-users full control over when, how, and by whom their content gets printed. At last week's event, HP announced a series of Web-to-print solutions, including oneâ€”the HP Print It! buttonâ€”that potentially could serve as a direct link to centralized print providers and to in-store printing stations. Questioned about the likely reaction to a built-in printing button by an industry still smarting from the Adobe/FedEx Kinko's controversy, HP executives said that Print It!â€”a widget that reformats HTML pages for hard-copy output as cleaned-up PDFsâ€”would not interfere with relationships between print buyers and print providers.

But the event's agenda left no doubt that HP wants, expects, and will do everything in its power to make printing from the Web the driving force behind the profit opportunities it sees in Print 2.0.

Presented on the 51st and 52nd floors at Seven World Trade Center, the program exposed about 800 invited guests to spectacular panoramas of Manhattan and equally arresting views of Ground Zero (now a bustling construction site) immediately below. In this mind-expanding setting, the attendees were asked to broaden their conception of print to include all that Print 2.0 has in store for it: a "mash-up" of personal and professional content that can be expressed as photo books, CD labels, greeting cards, letterhead, invitations, business cards, and other items created and printed the consumer's way with the assistance of tools from HP.

Graphic Design a la Gwen

The marketing campaign for Print 2.0 blends touches of celebrity glamour with moments of deeper inspiration. Pop chanteuse Gwen Stefani, who is also a graphic designer, offers her illustrations free of charge for download and printout from a special area of the HP Web site. Consumers also can upload personal photos and captions for inclusion in a book capturing one of Stefani's concert tours; the book then can be ordered online for $29.99.

A Print 2.0 book project on a more serious note is Letters from Katrina, a collection of letters sent by children to victims of the 2005 disaster. Promoted by HP and Lightning Source, which uses HP digital presses to print the title on demand, Letters from Katrina was compiled by Mark Hoog, a leadership coach and a pilot for United Airlines.

But the centerpiece of the program was a series of "Experience Tours" through theatrically-staged exhibits simulating HP's applications of Print 2.0 in various end-user environments: for example, a bedroom shared by a pre-teen girl and her older sister, played by young actresses who demonstrated how easy it was to design and order rock-star photo books thanks to online tools from HP. In adjoining rooms, their "parents" carried out more grown-up printing tasks with equal ease.

The common theme of the "experiences," which also included business simulations, was that whenever an end-user decides to print material that he or she has created digitally or accessed on the Web, HP intends to be there with a toolkit of solutions for making the printing happen in whatever way that end-user finds most convenient and satisfying. Cathy Lyons, senior vice president for Strategic Change Management in HP's Imaging and Printing Group, observed that content has become so pervasive, rich, and personalized that consumers have grown used to the idea of having things their way when it's time to print. "That's the single biggest catalyst for additional printing opportunity," she said, calling the opportunity "almost unlimited."

If commercial printers and other traditional providers seemed excluded from some of these scenarios, it was a telling indication of the extent to which page output is being transformed by HP and other technology companies into a decentralized, do-it-yourself activity that traditional print-for-pay models were never structured to accommodate.

Shifting "from Printers to Printing"

The business objectives underpinning Print 2.0 were outlined in an opening keynote by Vyomesh Joshi, executive vice president of the Imaging and Printing Group. "We are in the consumption business," he declared, adding that the question now before HP is, "how do we shift from printers to printing?"

The "printing" he was referring to was the staggering volume of 49 trillion A4 pages produced in 2006, about 9% of which were printed digitally. HP systems, said Joshi, accounted for about 2% of the overall outputâ€”a share that the company wants to increase. The stakes will be even higher by 2010 when, according to HP's projections, the volume will be 53 trillion pages with a slightly higher proportion (10%) produced digitally. Joshi said that HP's goals are to drive more high-margin pages to digital output on HP equipment and, in the process, to accelerate the general changeover from analog to digital.

He also pointed out that 48% of all printing now originates as content taken straight from the Internet, creating the market opportunity on which HP most fervently hopes to capitalize. "We want to derive the meaning of printing from the Web," Joshi said, and "extend the digital publishing ecosystem" that the Web has spawned.

As HP ventures into the digital publishing ecosystem, it will have help from acquisitions and partnerships that enhance its ability to deliver printing services where consumers want them. Joshi mentioned, for example, an alliance with the Meijer supermarket chain that will place HP photo printing kiosks in 181 Meijer stores.

Through its acquisition of LogoWorks, an online service for logo design, HP offers small- and medium-sized businesses a streamlined way to create and print business cards and other brand-identity materials. LogoWorks has a partnership with Staples whereby Staples customers can use in-store kiosks to design and print business cards in 30 minutes. Two additional recent acquisitions by HP, the online photo services Snapfish and Tabblo, afford similar opportunities to create the Web-to-print experiences that are at the heart of Print 2.0.

Joshi said that in keeping with its plan to drive more pages to digital output, HP will continue to improve its digital printing equipment in ways that will make these solutions more competitive with conventional analog presses. He also noted that HP wants to help its professional graphics customers share in Web-based printing opportunities by encouraging them to migrate from analog production to digital output on HP platforms. "Everything you see printed on a Heidelberg press or a screen printer, we want to go after those pages," Joshi said.

The Digital Dimension

Other commentary of interest to graphics businesses came from David Taylor, senior vice president of global sales, Lightning Source; and Alon Bar-Shany, vice president and general manager of HP's Indigo division. Both portrayed the efficiency of digital production as the commercial segment's key to sharing in the bounties of Print 2.0.

"The essence of Lightning Source," said Taylor, "is that it keeps books alive." In the digital print-on-demand model utilized by the La Vergne, TN, digital print services provider, "sell book/print book replaces guess how many to print, and get it wrong."

Taylor explained that because the model is based upon sending book orders into production only after the books have been sold, "print-on-demand is all about making sure that nothing goes out of print." He said in the traditional method, where the first step is to manufacture an inventory of books to sell, "publishers always get the print run wrong"â€”usually by printing too many copies and then losing track of the unsold units.

According to Taylor, "gross inefficiency" is the hallmark of the traditional book supply chain, in which books must move from publishers through a hierarchy of national distributors, wholesalers, and retailers before reaching readers. He said that many of the units coming to market in this way are printed for "image" and other unsatisfactory reasons that divorce supply from demand. Digital print-on-demand eliminates the waste by closing the distance between publisher and reader with books produced strictly to order, based solely upon actual sales.

Noting that Lightning Source's business is growing between 30% and 40% per year, Taylor predicted that digital print-on-demand soon will account for "the vast majority" of books in print. With digital production, it becomes possible to "monetize single-copy orders" even when the demand for a particular item is minuscule. Linking that kind of demand to digital on-demand output via Internet bookselling is driving a new business model for book publishing, according to Taylor, who added that as a result, "rumors of the death of the book are much exaggerated. It's not going to happen."

Bar-Shany's message was that because 90% of all pages still are printed by analog methods, HP has a clear opportunity to help its analog customers develop digital capabilities for success in Print 2.0. With digital presses and hybrid workflows that also support analog output, he said, conventional printing companies can turn themselves into "creative production factories" where the graphic arts remains an art form.

HP's footprint in professional digital printing is a worldwide installed base of 4,000 Indigo color digital offset presses, many of which are at work in multi-press sites running as many as 30 Indigos. Bar-Shany said that in 2007, Indigo users will produce 10 billion high-value pages selling for an average 50 cents to $1 each. Much of that value is added, he continued, by the fact that "digital printing is becoming affordable" to the point where it's possible to produce a full-color A4 page for three cents, including ink and equipment operating costs.

HP is emphasizing end-to-end solutions for its Indigo customers from digital front ends to post-printing options for binding and finishing. Bar-Shany said that digital printing with Indigo enables "mass customization" of labels, marketing collateral, and many other printed items that can command higher prices with variable-data personalization.

Where to Reap the Rewards

With the newest Indigo equipment, he added, "we're trying to push the color quality all the way up to photo," and as a result of these quality improvements, the market for photo output on Indigos has "really exploded" in the last few years. Much volume in labels, marketing collateral, and direct mail also is migrating to Indigo presses, according to Bar-Shany. The latest opportunity is in transpromotional documents: bills, statements, and other business paperwork printed with personalized advertising messages. An Indigo customer in Israel, for example, has just launched a program to add individualized marketing content to credit card statements sent to every cardholder in that country.

Bar-Shany emphasized that HP's goal for Indigo is "coexistence" with other production methods in commercial printing environments. "We're not replacing analog. We want to complement it," he said.

The event's principal technical announcements for the commercial and industrial markets concerned two large-format printing solutions and a "smart" label and packing technology.

The new HP DesignJet T1100 MFP is a 44", multifunction thermal inkjet device for copy shops, small- to medium-sized businesses, and other professional environments. X2 technology, HP's first piezoelectric inkjet platform for high-speed, large format industrial printing, will go into production at an HP factory in Oregon.

The HP Smart Label and Packaging Solution, expected to be available next March, is an anti-counterfeiting measure for pharmaceuticals and other products. It uses Indigo presses to incorporate "ePedigree" authenticating features into packaging, creating an electronic chain of custody that tracks a product's path through the supply chain to retail.

Patrick Henry, Executive Editor for WhatTheyThink.com is also the director of Liberty or Death Communications, a consultancy specializing in research, education, promotional, and editorial support services for the printing and publishing industries.

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